OIL AND GAS

With Washington focusing on Keystone XL and oil and gas drilling, will unconventional sources of energy dominate the energy policy discussion moving forward? During today's OnPoint, Peter Behr, a reporter for EnergyWire, discusses the business and regulatory hurdles surrounding oil and gas pipeline infrastructure. EnergyWire, E&E's newest publication covering the politics and business of unconventional energy, launched this week.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Pete Behr, a reporter with EnergyWire, E&E's new publication covering the politics and business of unconventional energy. Pete, thanks for coming on the show.

Peter Behr: My pleasure.

Monica Trauzzi: Pete, LNG exports are emerging as a major political and economic issue this year and E&E has been covering all angles of this story and this is something that you'll be focusing your reporting on in the coming months. Where do you see this story going? What are the critical angles?

Peter Behr: Well, as we reported today, there's a major market in Asia led by Japan. Fifty-one, I think-52 of their 54 nuclear power reactors are not running. They've got to replace that energy. It's not clear whether they'll shut down all of them, some of them, but they have a tremendous appetite for LNG. That's going to put pressure and an opportunity in the United States to increase the number of terminals that are capable of exporting LNG. On the other hand, as we've reported, there's going to be pressure from the consumer organizations and chemical producers to try to stop or slow down exports of LNG because they fear the price will go up. So, I think that's clearly a major issue for the administration.

Monica Trauzzi: Natural gas is such a big buzzword right now and there's a huge amount of interest in gas production. There are so many hurdles and unanswered questions though, does this fuel source have long-term staying power? Based on what you're seeing, all the debating and all the questions surrounding natural gas, you know, will we still be talking about it 20 years from now in the same way?

Peter Behr: Well, I don't know if we're going to be talking about it in the same way, but there is-I think there's such a momentum behind natural gas development from shale and unconventional sources, that this is not going to be stopped. The key question is how is it going to be regulated? And one of the things that-one of the issues that we're really focusing on is how regulation varies state by state, because you do see tremendous variation there and there's an interest in whether a set of best practices will develop for handling the shale gas extraction without endangering water supplies.

Monica Trauzzi: TransCanada has signaled that they'll be re-applying for a permit for the Keystone XL pipeline in the coming weeks. Obviously, pipeline expansion, even beyond the Keystone discussion is critical to the energy policy discussion and it's a critical component to the natural gas discussion. How will you be digging into that story for EnergyWire?

Peter Behr: One of the most interesting insights is that the flows of natural gas that we've been used to are likely to change in important ways. For one reason, the source of natural gas is going to shift from-primarily from the Gulf of Mexico much more broadly into Appalachia, more of it coming from the Rockies. And this gas will have to move in new directions to reach markets. There's another issue that is just starting to get attention now and that is do we need to more closely align the natural gas pipeline infrastructure with power plant needs for customers in the Northeast particularly. They're at the end of current pipeline connections. And so there's already concern that if we moved substantially toward natural gas for new power plant construction, that we better pay attention in the ability of the pipelines to deliver the gas to the power plants when they most need it.

Monica Trauzzi: Does the pipeline safety issue still resonate? I mean we were hearing so much about it last year, but do the economics of moving more natural gas throughout the country sort of outweigh any of the safety concerns at this point?

Peter Behr: Well, I think like the regulation of environmental issues from shale gas development, the safety regulation is going to be a subject of intense debate. But, again, I don't think it's going to be an open season. I think there's going to be a lot of interest in handling that part of it in a responsible way.

Monica Trauzzi: And you'll be covering a story coming out of Ohio about how their gas boom has affected their economy. Can you sort of preview it a bit for us?

Peter Behr: Sure. One focal point is the steel industry and, as late as the 1970s, Ohio was a major steel producer and then the industry was just decimated by the cutbacks in U.S. steel production. Well, shale gas development, first in Marcellus and then in the Utica shale deposits in Ohio, has already given a tremendous boost to pipe production in Ohio. So you see a $650 million new pipe mill going up in Youngstown. You see Timken getting an agreement with the Steelworkers to expand their capacity in Canton, Ohio, the same in Lorain, Ohio. So it's already giving a tremendous pickup to the steel industry in the state and if Shell goes ahead with plans to build a cracker plant on the Ohio River, you're also going to see the big economic impact on the ethane production and the chemicals industry in that part of Ohio and West Virginia. So it's a big deal.

Monica Trauzzi: How do you think EnergyWire sort of separates itself from some of the other energy coverage that we see out there? What's E&E doing that's different?

Peter Behr: Well, I think we've got a number of goals and one of them is to be really comprehensive. So in the report every day there is the top news about what's happening, but we're also looking for opportunities to put that news in the context with analytical pieces about, for example, the impact of the natural gas boom on the electricity sector. And finally, there are going to be enterprise pieces such as the ones that we've done looking at how industry representatives participate in the state regulatory agencies that oversee shale gas. So I think from a standpoint of the comprehensive news, the analytical context and the enterprise initiative reporting we're going to try to get it all.

Monica Trauzzi: All right, good stuff. Thank you for coming on the show, it was nice to see you.

Peter Behr: My pleasure.

Monica Trauzzi: And I look forward to reading all of your work in EnergyWire. And thanks for watching. We'll see you back here tomorrow.